The release had been sent to me by a tipster (send in your tips here) with the statement, “Seems odd to me that the title of their PR would be Morgan Drexen Says Let’s Be Upfront About The Fees when they never disclose in the release what Morgan Drexen’s fees are, how they’re calculated or collected, or if the company is even going to be changing their business model to comply with the FTC ruling?”

The tipster (send in your tips here) had raised an excellent point and as I said in my article, “I’ve emailed Morgan Drexen to ask, let’s see if they respond.”

I emailed their media department, the very employees or representatives that are supposed to work with the press.

During my professional career at the nonprofit I founded, Myvesta, I had a strong media department. I’m proud that say that Nancy who ran our media department went on from Myvesta to be named the FTC’s Public Affairs Director. – Source, Source

Nancy taught me a lot about working with the media. And one of the lessons I learned by working with her was to be helpful to all media because the media helps to tell your story.

And now I find myself on the other side of the media rope. Instead of being the person interviewed constantly I’m now the one writing and trying to get information in order to help clarify and report.

It’s hard. Many of the companies I write about simply don’t respond to requests for information or clarification. Rather than discuss, they hide or avoid. Not a smart strategy for them if they want to develop a reputation of honesty and trustworthiness.

But my saga with Morgan Drexen over trying to get a simple answer to the tipster (send in your tips here)s question turned into what I would classify as the most bizarre media encounter I’ve ever had and ended with perceived threats and an attack against me.

As I said in that Friday post, I asked Morgan Drexen for clarification about what they meant when they said, “Unscrupulous Debt Settlement Companies can no Longer Charge an Upfront Fee for Their Services. Morgan Drexen Welcomes Any Protection for the Consumer.”

The initial response from the Morgan Drexen media contact was that she did not understand my question of, “Does your press release state that Morgan Drexen and the attorneys they support will only charge consumers when debts are settled?”

She said she was confused and that my question was a statemenrt. The quoted response from her was, “Morgan Drexen and the network of attorneys they provide automated software service too have always been, and will continue to work within the law.”

Now you may be scratching your head and saying to yourself, the Morgan Drexen response does not answer the question and you’d be right.

So I tried again and this time I wanted to make sure that my question could not be misconstrued as a statement so here is what I asked:

My question still stands, under the FTC TSR there are two methods of charging fees and your release is not clear on this matter. You could either conform to the TSR and not collect a fee until the debt is settled or you could claim you are exempt under the TSR as attorneys and collect a fee beginning after the consumer enrolls in the debt settlement program. Your statement that you will work within the law is vague given the availability of the possible attorney exemption.

Let’s see if I can ask this one more time.

Can you help me to clearly understand what the Morgan Drexen approach is under the FTC TSR and how you plan to “work within the law” by either claiming an attorney exemption to fees and collecting them before settlement or collect fees as specified under the TSR only on settlement?

By this point the Morgan Drexen media department had asked me what my press credentials were and in my email response which included the above I said, “I write for getoutofdebt.org and my audience is filled with many regulators and states that monitor the debt relief industry through my work.”

So the response from Morgan Drexen was what appeared to be an automated statement:

Hello

Thank you for contacting us regarding a recent press release you have read. Despite the fact that we receive many emails this inbox is not monitored daily.

If you are a reporter on a deadline please call the designated media line number you were given as an approved contributor for the financial industry.

Sadly we can’t respond to ‘ Bloggers ‘ or any individual associated with financial companies currently under investigation in California. In addition, companies claiming to provide work for nationwide regulators, unless the regulatory organizations can be named and contacts confirmed.

The Media Team

Huh? Was I the one the automated response called a ‘blogger’ and was I the person they were stating was associated with some company currently under investigation in California and working for regulators? And if they were insinuating that stuff why would it come in what clearly appears to be an auto-responder email to all inquiries to the Morgan Drexen media department? It just made no sense.

Keep in mind, they still have not answered what I thought was a simple clarification question.

I responded again.

Finally I get a response from “the Media Team” with a quote for the story and statement that says:

“Morgan Drexen, Inc. and the network of attorneys they provide automated software service too have always been, and will continue to work within the law. They welcome any regulation to protect consumers from companies such as Myvesta and Debt Counselors of America who claim to be non-profit, and therefore under investigation in California. Companies you and your wife were involved with Mr. Rhodes, that is why we distance ourselves from any association with you and your blog.”

I am sure you can edit the bits that don’t fulfill your self promotion sir.

So seriously, when is the job of any company that wants to establish a reputation as a leader in any industry to attack the media or any public outlet of infromation? How ridiculous is that?

So what began as a one sentence clarification question resulted in no answer from Morgan Drexen and a personal attack against me with clearly incorrect information.

From my subsequent response to Morgan Drexen.

—

This is the strangest media interaction I’ve ever had with any company. My tone and contacts with you have been both professional and personal. Not snippy and snide. Your tone and actions have been a seeming attempt to create a poor taste.

First, allow me to clear up your incorrect information. I’ve talked openly about the California issue for years and I even talk about it on my site. See http://getoutofdebt.org/16877

As you will see the disagreement with California was resolved eight years ago. Myvesta had one issue in its lifetime, as the result of a lack of response from California and we had over 20,000 clients. Shall I start counting all the lawsuits and actions against MD?

Myvesta was Debt Counselors of America, same group and despite your insinuation, a fully vetted and approved IRS 501(c)3 nonprofit with permanent status. The company closed in 2006.

I’m at a loss why you won’t answer my simple question. It would seem to me that your job, as a media professional is to assist outlets that want to write factually and accurately about MD. The only thing you have accomplished is to make a bigger story out of a little one.

What began as a simple clarification into what your press release said, has become one of an unfounded attack on me and your inability to answer just one simple question.

So, let’s try this one more time and if you elect not to answer the question I’ll take that as an affirmative response, since you won’t deny it.

Question: Is it the intention of Morgan Drexen to charge consumers and take fees for debt settlement services between the time a consumer enrolls and a debt is settled as specified in the new FTC TSR rules set to go into effect on October 27, 2010?

And while I’m clearing up misinformation, I never said I worked for any regulator, I said some of my readers are regulators and legislators. The same folks that are going to read my story about how or why you can’t answer my simple question to provide clarity about your very own press release.

Morgan Drexen Says Let’s Be Upfront About The Fees

As I was wrapping up this article I got yet another response from Morgan Drexen with their answer to the above. They said again, “Morgan Drexen, Inc. and the network of attorneys they provide automated software service too have always been, and will continue to work within the law.”

Oh yes, and I got this from the Morgan Drexen media department, “Your “running with you’re charging fees under the attorney exemption” is tantamount to a statement that Morgan Drexen intends too violate the law. As you have claimed your blog is read by regulators, such a story would be irresponsible and defamation of the highest order.

Of perforce, our legal department will be monitoring your publications for actionable statements.”

For the record, I never claimed, insinuated, or said that Morgan Drexen would be violating the law, I was asking for clarification on how they planned to proceed under the law since there are two possibilities.

This is from the FTC, “There’s no general exemption from the TSR for attorneys who engage in telemarketing. However, most attorneys are likely to fall outside the Rule for at least two reasons. First, the TSR applies only to providers who use interstate tele-marketing. Second, providers – including attorneys – who meet face-to-face with their customers before signing them up are likely exempt from most of the Rule’s provisions.” – Source

While Morgan Drexen says in their press release, “These regulations are a step towards protecting consumers and here at Morgan Drexen we encourage stringent regulations, which will prove to be challenging for these dishonorable companies”, they either can’t or won’t clearly answer with a simple yes or no if they or their network of attorneys specifically plan to not charge consumers prior to settling debts as specified under the new Federal Trade Commission rules.

Look, I get the fact Morgan Drexen says they are simply “an array of front end and back end services to law firms seeking to perform superior debt settlement solutions” (source) but certainly they can answer if it is their intention to participate in charging consumers in advance of consumers receiving bona fide debt settlement offers under the telemarketing sales rules.

Does anyone understand why Morgan Drexen would say false statements about me and threaten me and just not simply answer the question?

Do you think the statement from Morgan Drexen answers the question? Their statement once again, “Morgan Drexen and the network of attorneys they provide automated software service too have always been, and will continue to work within the law.”

Original Morgan Drexen Press Release

Morgan Drexen Says Let’s Be Upfront About The Fees

A New Federal Trade Commission Ruling Curbs Debt Settlement Companies. Unscrupulous Debt Settlement Companies can no Longer Charge an Upfront Fee for Their Services. Morgan Drexen Welcomes Any Protection for the Consumer.

Los Angeles, CA (Vocus) August 6, 2010 — Last week the Federal Trade Commission came down hard on unscrupulous debt settlement companies. From October 27th, new regulations will prevent debt settlement firms from charging up front fees.

General Counsel for Morgan Drexen, Inc. Jeffrey Katz says, “ These regulations are a step towards protecting consumers and here at Morgan Drexen we encourage stringent regulations, which will prove to be challenging for these dishonorable companies.”

Morgan Drexen provides automated software support to attorneys across the nation. These attorneys are assisting consumers facing extreme financial difficulty. The attorneys provide debtors with a non-formal debt resolution program, which is an alternative to debt settlement. Helping consumers avoid the scar and adverse effects that bankruptcy brings. This also helps to avoid the risks involved with typical debt settlement companies.

In addition to no upfront fees, the regulations will also require debt settlement companies to tell the consumer how long the debt settlement will take.

Elizabeth Floyd an Illinois resident sought financial help from the Williamson Law Firm, who are supported by Morgan Drexen. Elizabeth recalled. “ I was told that the program would take 6 years to complete. Due to their expertise I completed in just 17 months. Those guys really helped me get rid of my debt.” For Robert Pegler it was a similar story. He enrolled with Brookstone Law in California. He was told that the program to rid him of debt would take 2 years; he was debt free in just 13 months.

Morgan Drexen CEO Walter Ledda is cheering on any regulations that protect the consumer. “Why would you withhold information as to how long it will take to make a consumer debt free? We support the idea of giving certain information freely. As part of the disclosure used by the attorneys we support this information is given upon request. These new regulations will certainly get rid of those companies who are not helping consumers, but lining their own pockets.”

Alison Brown a representative from the Federal Trade Commission says. “ The FTC brought forth this ruling based on public complaints and law enforcement actions. We think it will put the incentives in the right place. It will give an incentive for debt relief companies to work harder for the consumer.”

Ledda adds. “Any measure that is put in place to protect consumers is a good thing. Consumers across America need to be protected and educated when it comes to dealing with their finances.”

Thanks for the comment. The way I see it there is a lot of apple and orange difference here between the examples you raised and the issues with debt settlement.

Bankruptcy attorneys for example. Many of the Chapter 13 attorneys do take their fee in installments during the plan and are not paid up front. Damon gets paid and delivers the service in hours if not days. Advertisers, through Google don’t pay me for 30 to 45 days after their ad owes a payment.

The problem with the advance fees in debt settlement is that many consumers were paying their fees years in advance of receiving the service. The debt settlement company was not escrowing those fees for release when the service was actually performed but was taking them as income long before the service was delivered. This creates a de-facto ponzi scheme with new people today paying for the services delivered to the people that paid a year ago and their fees were spent.

At this point it is an academic issue. it is now the rule of the land that advanced fees are banned and the industry had years to get behind an alternative solution, including the UDMSA which allowed for a fee up-front and a monthly retainer, and the industry trade associations fought back against that. The trade associations made it very clear, they would not accept any compromise and that’s the primary reason there was none.

I’m not convinced that “many” consumers will be wooed into trudging into a face-to-face meeting and then have to pay when the rest of the debt settlement companies will be promoting no advanced fee and help over the phone.

This is not the first time the FTC has enacted a fee ban prior to services being delivered. Credit repair groups can’t get paid before delivering services and once the new Consumer Finance Protection Bureaus begins these rules may also apply to credit counseling groups. Time will tell.

If we are talking fairness then in fairness to consumers that were paying fees years in advance, debt settlement companies should not have been enrolling those consumers because they were not ready, able, and willing to settle within a short period of time. Companies need to go back to enrolling qualified consumers will be able to get paid in a short period of time.

Debt settlement began as a contingency fee industry and is simply returning to it’s roots.

Steve

matt

I read alot of your blog posting and appreciate your desire to help the consumer and their debt problems. I also get that you are against a service fee before the settlement is reached.

Given for a company to exist it needs a cash flow; and in fairness to the customer the fee should be commenserate with the level of effort provided during the billing period. And DS companies do provide support to the customer while the savings are building in their DS company initiated savings account (which many customers using DS companies see as the major value add, since many struggle with the discipline to self save). And clearly the complete ban on making an income yet services are being render is harsh for any company in any market.

Would you not agree that a nominal monthly fee to cover support during savings periods with a performance based Settlement Service fee at the time of settlement is an optimal balance for a business to have a revenue stream commensurate with services rendered? Or should the continued flogging of this industry continue with a complete ban on fee collection before settlement?

Bankruptcy Attorneys get their retainer, Credit Counseling get their monthly service fees, Damon gets his fees when he helps consumers, you have your advertisers. All DS companies are not scammers and many do have satisfied customers even with all the downsides you discuss to credit reports, etc and their should be in disclaimers going into such programs. I just think a complete advanced fee ban is too harsh.

Besides; many will just have a face-to-face with the customer nullifying the TSR all together and have the market drive the fee structures as any market should. My vote; a $25 monthly fee (just drink a few less Starbucks; and you need to talk about that rip-off scam) and a Service fee based on total saved (give the negotiators an incentive to work hard for their customers).

What do you say; is there a compromise here?

matt

I read alot of your blog posting and appreciate your desire to help the consumer and their debt problems. I also get that you are against a service fee before the settlement is reached.

Given for a company to exist it needs a cash flow; and in fairness to the customer the fee should be commenserate with the level of effort provided during the billing period. And DS companies do provide support to the customer while the savings are building in their DS company initiated savings account (which many customers using DS companies see as the major value add, since many struggle with the discipline to self save). And clearly the complete ban on making an income yet services are being render is harsh for any company in any market.

Would you not agree that a nominal monthly fee to cover support during savings periods with a performance based Settlement Service fee at the time of settlement is an optimal balance for a business to have a revenue stream commensurate with services rendered? Or should the continued flogging of this industry continue with a complete ban on fee collection before settlement?

Bankruptcy Attorneys get their retainer, Credit Counseling get their monthly service fees, Damon gets his fees when he helps consumers, you have your advertisers. All DS companies are not scammers and many do have satisfied customers even with all the downsides you discuss to credit reports, etc and their should be in disclaimers going into such programs. I just think a complete advanced fee ban is too harsh.

Besides; many will just have a face-to-face with the customer nullifying the TSR all together and have the market drive the fee structures as any market should. My vote; a $25 monthly fee (just drink a few less Starbucks; and you need to talk about that rip-off scam) and a Service fee based on total saved (give the negotiators an incentive to work hard for their customers).

What do you say; is there a compromise here?

http://GetOutOfDebt.org Steve Rhode

Matt,

Thanks for the comment. The way I see it there is a lot of apple and orange difference here between the examples you raised and the issues with debt settlement.

Bankruptcy attorneys for example. Many of the Chapter 13 attorneys do take their fee in installments during the plan and are not paid up front. Damon gets paid and delivers the service in hours if not days. Advertisers, through Google don’t pay me for 30 to 45 days after their ad owes a payment.

The problem with the advance fees in debt settlement is that many consumers were paying their fees years in advance of receiving the service. The debt settlement company was not escrowing those fees for release when the service was actually performed but was taking them as income long before the service was delivered. This creates a de-facto ponzi scheme with new people today paying for the services delivered to the people that paid a year ago and their fees were spent.

At this point it is an academic issue. it is now the rule of the land that advanced fees are banned and the industry had years to get behind an alternative solution, including the UDMSA which allowed for a fee up-front and a monthly retainer, and the industry trade associations fought back against that. The trade associations made it very clear, they would not accept any compromise and that’s the primary reason there was none.

I’m not convinced that “many” consumers will be wooed into trudging into a face-to-face meeting and then have to pay when the rest of the debt settlement companies will be promoting no advanced fee and help over the phone.

This is not the first time the FTC has enacted a fee ban prior to services being delivered. Credit repair groups can’t get paid before delivering services and once the new Consumer Finance Protection Bureaus begins these rules may also apply to credit counseling groups. Time will tell.

If we are talking fairness then in fairness to consumers that were paying fees years in advance, debt settlement companies should not have been enrolling those consumers because they were not ready, able, and willing to settle within a short period of time. Companies need to go back to enrolling qualified consumers will be able to get paid in a short period of time.

Debt settlement began as a contingency fee industry and is simply returning to it’s roots.

Steve

lucy

Steve,

Your clearly not very media savvy perhaps you need to go back to media school with this woman Nancy.

You don’t need a “tipster” for a press release they publicly publish them for you to read on their website. I thought everyone knew that. Why are you always so suspicious with your actions. You are fooling some consumers but not all.

Take a look at the press releases your may learn some big words.

lucy.

http://GetOutOfDebt.org Steve Rhode

Lucy,

I agree press releases are public information and distributed by the company. Let’s see if this helps to clarify it for you. Someone sent it to me to let me know it had been published, a tipster.

Steve

lucy

Steve,

Again I have to say your use of a tipster for a public domain shows your lack of knowledge of the media industry. Sign up to the alerts!! Talking about lack of knowledge, you recommend a man called Damon Day. I read on Bing that he has BIG problems with the IRS is this true. Why are you recommending someone so shady , has anyone else dealt with this day guy?

Why does he not have a physical address on his website or a contact number, what state is he in, you can see why I am suspicious.

Who do I know who to trust, my mother needs help?

lucy.

http://GetOutOfDebt.org Steve Rhode

Lucy,

Do you have any idea how many hundreds of alerts I get on a daily basis? There are 335 in my reader right now as I write this. I was simply tipping my hat to thank the tipster that sent it to me. I am appreciative to my readers that help bring their concerns and issues to my attention.

I would suggest you help your mother find someone she is comfortable working with to overcome her financial problems. If you are not comfortable working with Damon Day then don’t use his services. I provide a description of Damon Day and my experience with him, here. If you have specific questions regarding Damon, I would suggest you contact him and ask them directly. I’m sure he’ll be happy to assist you and your mother in any way possible.

I see you live in the United Kingdom and it appears from your IP address you are not far from where I used to live there. Small world. Does your mother live in the UK or the United States?

Steve

http://damonday.com Damon Day

Hello Lucy,

I am assuming that what you found on Bing was the “anonymous” personal attack that was actually written by Dan Smith, the President of New Era Debt solutions. For obvious reasons he doesn’t want consumers to know that the attack was coming from a debt settlement company.

I am concerned that you looked at my website and jumped to the conclusion that I “was so shady”. Especially when the attack website that you found was only one page, had no links, no address, no phone number, a blocked domain owner and not even a clue as to who wrote the obvious rant about me. However you can find that it is hosted on the New Era Debt Solutions server.

The reason my address is not on my website is because I work from my home office. I of course have no problems giving my clients my mailing address but there is no reason for me to publish it on my website. The reason I no longer have my direct phone number on my website is because my phone used to ring all day long. If a consumer would like to contact me they have two options. They can use the contact or the consultation form on my website.

Depending on your request I can either respond via email, or my assistant can contact you by phone to set up a consultation if that is what you are requesting. Of course my clients have all of my contact information and can call me at anytime.

Going back to Dan Smith’s personal attack. You will notice that he doesn’t allow the ability for anyone to respond to it on the page. Hmm, seems shady to me. If you would like to read my response to it you can go to

I don’t think they were doing anything but calling the kettle black sir. They are in their right to take a request from a blogger with a self serving agenda and not give it the credence or time of day that a “real” reporter would come to expect. Seriously, they didn’t threaten you – you went in with a hidden agenda – you did not start out to inform the general populous, in response to your inquiry. I see in your response that you were also starting to flex some ego – push around some “power”? Hmmm, did you learn that in reporter school? Come on Steve quit being a poser and report what you want but do it fairly and truthfully.

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